Editorial

Where Does the Economy Go from Here?

By David Savastano, Ink World Editor | October 9, 2009

2001 was a tough year for the economy in general, and the printing ink industry in particular. With the exception of a few companies that have successfully navigated through the difficult financial straits or have developed unique products that serve niches, it was a hard year all around.

It should come as no surprise, then, that the 2002 State of the Industry Report survey released by the National Association of Printing Ink Manufacturers (NAPIM) during its April 2002 convention paints a grim picture of 2001. As can be seen in the NAPIM convention review beginning on page 41, according to the members who responded to NAPIM’s survey, ink sales dropped by 5.8 percent in 2001 compared to 2000, and decreased by 8.5 percent in terms of volume.

In particular, publication and commercial ink manufacturers suffered, with a 10.4 percent drop in volume of ink sold compared to 2000, while packaging inks declined 2.6 percent in terms of volume from 2000 levels.

According to NAPIM, the news in particular segments was varied. Litho heatset inks declined 13.2 percent in volume in 2001 from the previous year, and litho no-heat inks dropped 11.5 percent during the same period. That is an astonishing drop. On the packaging side, water-based gravure, a very small segment to begin with, suffered a 31.9 percent drop in volume, and litho sheetfed declined 9.3 percent.

The only segment that showed a gain was water-based flexo, which had a 4.7 percent growth in volume in 2001.

About the only good news was that the ink companies’ return on net assets (RONA) did not decline in 2001, holding fairly steady at 12 percent. That suggests that ink companies have controlled their spending during the economic downturn.

The question that must be asked is, “Will the economy recover in 2002?”After the first five months, the answer is not particularly encouraging. Even though printing organizations are predicting better results, leading ink manufacturers are hedging their bets.

For the most part, ink companies are anticipating a mid-year recovery at best, and the end of the year as more likely. With the struggles in the Middle East and the concerns over oil prices, it could be a rougher year than originally anticipated. As the economy continues to fluctuate, it appears that ink companies will be forced to ride along, waiting to see what will happen next.